Record low purchase prices have shifted from a stalemate, and the resumption of tourism and hospitality also offers some hope, but little to offset the significant increase in costs for livestock farmers. In the longer term, farmers will face the additional challenge of a new support policy and demonstrating that their activities are sustainable and climate-friendly.
Although the pressure on the animal keepers has eased, the state of grace is still far away. The rapid and significant rise in grain prices that has been going on for months continues, with feed costs skyrocketing, affecting livestock farmers.
There is little chance of a substantial fall in grain prices.
The price of grain is determined by stock market and world market trends, now China is pushing up prices. The exact background to Chinese grain purchases is unknown, but it is most likely that the Far Eastern country will make efforts to significantly increase its pig population.
In China, a significant proportion of the pig population had to be killed due to the African swine fever epidemic. In addition, some believe that the disease has hit the head in new herds. The decline in Chinese acquisitions and general commodity speculative acquisitions is unpredictable.
For the time being, the high cost is not expected to be significantly offset by the increase in demand from tourism and hospitality, which will be relaunched by the lifting of anti-epidemic restrictions. The sectoral actors interviewed by the Hungarian Nation highlighted:
for the time being, only domestic tourism can be expected to pick up, but a substantial recovery would also require a resumption of international tourism.
For months, livestock keepers have seen the inevitability of passing on some of the rising costs to other players in the product lines. Consumers will therefore have to reckon with some price increases, but for most meats this will not be the rate, which would be a serious extra expense for families. Moreover, the process is not straightforward: producer price enforcement is a multi-stakeholder process, and traders do not aim to be more expensive to take over and resell to price-sensitive consumers.
The purchase price of live pigs has recently risen in the German market, to which domestic prices are also adjusting. However, this is only modest compensation for the takeover that reached a record low at the end of last year, caused by the dumping of export products stuck in the EU due to the outbreak of swine fever in Germany. Uncertainty in world trade is also being caused by Chinese developments, the slower-than-expected resumption of international tourism, and free trade agreements.
Poultry keepers are more optimistic here in Hungary. Feed prices do not spare farmers’ wallets here either, but demand may jump despite the slower recovery in hospitality and travel. This is because bird flu is infected in several European states. Significant flocks have so far had to be killed to control the spread of the virus, with six million birds in Poland alone. The devastation caused by bird flu will bring up prices in infection-free markets.
In several European countries, the approach of making livestock farming too polluting is now causing a significant setback.
This is not typical in Hungary yet, but at the same time the distribution of the new EU common agricultural policy subsidies starting from 2023 will be significantly influenced by the growing green attitude. Livestock keepers have been lobbying for years to adjust subsidies and for part of the much higher amount due to growers to benefit livestock farmers in the new funding cycle.
Farmers are forced to invest more and more in campaigns and professional materials demonstrating the sustainability of traditional animal husbandry for further more sustained growth in demand.
The egg sector is facing serious expenditure. The citizens’ initiative for a total EU ban on cages has been a success, with a large majority of decision-makers in Brussels and the European Parliament supporting it.
Due to the EU ban, domestic hen farmers would have to invest in a complete technological change for the second time in a decade,
and attacks on livestock keepers and the measures that are expected are already deterring many from taking action.
Source: Magyar Nemzet by magyarnemzet.hu.
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